Washington Watch: Realistic calculus of college-going costs

How can “free college” still not make college affordable for some students?  This is not a riddle. The answer lies in a common definition of free college as zero tuition and fees. The expenses associated with attending college, however, go far beyond tuition and fees. According to the College Board’s Trends in College Pricing, 2019-20 tuition and fees comprised only 20 percent of students’ budgets to attend public two-year institutions. For historically under-served students, those who are first generation, low-income or persons of color, financial considerations play a very important part in their decision about attending college. Yet, navigating the myriad of different college prices is no easy task in normal times and especially so in the COVID-19 pandemic. 

With pervasive unemployment or reduction of earnings for low income and minority students, postsecondary education and training can serve as a lifeline to a better life. But the cost can be a barrier; every dollar that a student must pay is consequential. Likewise, understanding the actual cost is consequential.

Different Versions of Cost

There is the sticker price or published charges, which typically consist of tuition and fees and room and board for a student attending full-time. In addition, all Title IV program participating postsecondary institutions make a net price calculator available. The net price distinguishes between the sticker price and what the student has to pay the institution, which subtracts from the charges  scholarships and financial aid in the form of grants, institutional, state and federal. And then there are other expenses do not go to the institutions. These represent the other 80 percent of the students’ budgets for attending public two-year institutions

Indirect college costs

So, what are these indirect expenses? These, together with the direct costs make up the cost of attendance. Aimed at students, the U.S. Department of Education’s office of Federal Student Aid states that “the cost of attendance (COA) is not the bill that you may get from your college; it is the total amount it will cost you to go to college each year.” It continued to specify the component costs, including “tuition and fees; on-campus room and board (or a housing and food allowance for off-campus students); and allowances for books, supplies, transportation, loan fees, and, if applicable, dependent care. It can also include other expenses like an allowance for the rental or purchase of a personal computer, costs related to a disability, or costs for eligible study-abroad programs.” Each institution is responsible for determining the cost of attendance for that institution.  

Indirect costs are the focus of a new report appropriately titled Beyond the College Bill: The Hidden Hurdles of Indirect Expenses. UAspire, a nonprofit entity whose mission is “ensuring that all young people have the financial information and resources to find an affordable path to and through college,” prepared this report, which was launched in a virtual briefing with introductions by Rep. Ayanna Pressley (D-MA-07). The report addressed indirect costs from both college and student perspectives. It examined how 800 colleges, including many community colleges, calculate indirect costs and how they communicate them to students as well as through interviews of 150 students how well students were able understand the total cost of going to college and the impact on them. Besides the findings of the research, the report presented policy recommendations and promising practices.  

Key college-related findings include: (1) a substantial minority of colleges (39 percent) did not communicate indirect costs in a transparent or consumer-friendly way; (2) discrepancies, as large as $8,000, existed in indirect expenses among institutions located in close proximity; and (3) the complexity of the factors relevant to the calculation of indirect costs resulted in use of multiple approaches and inconsistent calculations. With respect to the student experience, the study found that: (1) over half of the students surveyed (51 percent) paid more for indirect expenses than they anticipated and (2) about the same (53 percent) reported that they when they encountered unexpected expenses they were forced to make changes to their food shopping or eating regimen.

Helping to surmount financial hurdles

Institutions not only recognize the hurdles that indirect costs present to their students but have developed evidence-based strategies to reduce or eliminate them, according to the report. These strategies run the gamut from subsidizing public transportation, replacing textbooks with Open Education Resources to addressing food and housing insecurities by establishing on-campus food pantries and partnering with local housing authorities to provide subsidized apartments, respectively. Other approaches include emergency aid programs to provide stopgap assistance and on-campus social service centers help. 

Policy recommendations are directed at federal and state governments as well as institutions and aimed not only at increased funding but procedural changes to how financial aid needs are calculated and communicated to students. The American Association of Community Colleges supports and advocate for many of the recommendations. They include: (1) increasing student financial aid, such as Pell Grants, and Federal Work-Study funding along with a change in the formula to favor low- and moderate-income students, to cover a greater share of indirect costs; (2) requiring more transparency and accessibility to indirect cost information by title IV participating institutions; (3)  standardizing indirect cost terms and definitions as well as using consumer testing on net cost to eradicate inconsistencies in how indirect costs are calculated; and (4) using federal funding innovatively to research non-tuition expenses as well as to incentivize institutions, states, and vendors to reduce indirect costs.

For more information, please contact Jolanta (J.J.) Juszkiewicz at jjuszkiewicz@aacc.nche.edu.

About the Author

Jolanta Juszkiewicz
is director of policy analysis at the American Association of Community Colleges.